South African Breweries suspends contracts of 550 temporary workers as booze ban continues

SOUTH AFRICA – It’s nearly a month since the government of South Africa reinstated the ban on alcohol sales and no word has been heard from the officials pertaining resumption of trade.

Major industry bodies, associations and trade unions have warned of further job losses, collapse of businesses, dwindling income and billions of rands in lost tax revenue for government.

The two previous alcohol bans resulted in 7,400 job losses and E14.2 billion (US$974 million) in lost sales for the beer industry, while the government lost R7.4 billion (US$485m) in taxes and excise duties, as revealed by the Beer Association of South Africa.

In general, 165,000 people have already lost their jobs in the wider alcohol industry with a further 100,000 moving into poverty.

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The situation is bound to get worse with players such as South African Breweries (SAB) announcing the suspension of 550 temporary contract workers across its entire operations.

“The third alcohol ban has resulted in a reduced demand for the temporary workers skills, this is no fault of their own but rather a result of the current operating environment.”

Zoleka Lisa – Vice president of Corporate Affairs at SAB

This comes weeks after the beer maker suspended commitments to retain workers and investments, agreed as part of its merger with Anheuser-Busch InBev, due to the country’s decision to ban alcohol sales to curb the coronavirus.

The conditions of the US$106 billion merger which took place in 2016 require SAB to maintain an aggregate headcount of 5,967 workers in South Africa and that AB InBev make a R1 billion (US$65.6m) investment in the country in five equal instalments of R200 million (US$13.1m) over a period of five years.

According to reports by BusinessTech, the recent decision by the country’s largest brewer was prompted by the lack of trade coupled with reduced storage capacity which has led to a slowing down of production, along with the uncertainty of the duration of the alcohol ban.

These temporary contracts will predominantly affect positions within SAB’s supply and logistics workforce, it said.

“The third alcohol ban has resulted in a reduced demand for the temporary workers skills, this is no fault of their own but rather a result of the current operating environment,” said Zoleka Lisa, vice president of Corporate Affairs at SAB.

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With SAB competitors like Heineken already retrenching 7% of its local workforce, Lisa says that the company is doing everything in its power to avoid this outcome despite having to navigate an uncertain regulatory and policy environment.

“We are reviewing all measures available to us, but with minimal communication and engagement from government on timelines for the ban, this has made business planning, and the consequential impact, extremely difficult.

She added that the scale at which SAB’s value chain is being impacted by the ban is deeply concerning.

“We have already cut overall staff salaries by 10%. We have already cancelled R5 billion (US$328m) in investments. We have reduced as much discretionary spend as possible, in order to deal with the uncertainty of subsequent bans and changes in regulations.”

With costs mounting, SAB called on the government to engage with the industry and all social partners in an attempt to ‘achieve greater responsibility in decision making’.

“This has to be a truly collaborative effort on all fronts so that we can all work together as partners in our fight against the pandemic,” Lisa said.

Meanwhile, the maker of Carling Black Label through its SAB Foundation has announced the 17 finalists in its tenth annual Social Innovation and Disability Empowerment Awards who will walk away with a total of R12.6 million (US$827,000).

Set up in 2010 as one element of the broad-based black economic empowerment transaction conducted by SAB, the foundation is an independent trust that annually invests millions of rands towards developing entrepreneurship in South Africa and the benefit of the wider South African community.

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